Today, the process of insurance claim handling for consumers or insurance policy holders is scattered among some 2500 insurance companies, thousands of agents, adjusters, and appraisal firms, dozens of struggling call centers and countless other service providers. A great deal of the process is manual and paper-based, and almost none of it is centralized. Each company owns, operates and pays for its own processing system, each one trying to accomplish the same general goals, each system and process redundant of the competitors' systems. Such older paradigms can often benefit from newer technological advances coupled with innovative methods of doing business. The convergence of information technology, the internet and concomitant methods of doing business offer opportunities to create efficiencies by way of lower costs and greater satisfaction to consumers.
The widespread use of the Internet as it relates to the insurance industry is restructuring and combining traditional value chains, products and services into entirely new products and services which were not possible before. This dramatic restructuring of global business and industry is creating new value chains in what is now commonly called the Network Economy.
One value chain that is likely to be changed forever is the service of taking, recording and handling routine insurance claims. Current claim handling systems are inefficient when viewed in the context of the economy as a whole. For example, every insurance company has its own claims departments, processes and associated overheads. Insurance companies must pass on the costs associated with these departments, processes and overheads in the form of higher premiums to its customers. The paradigm of submitting a loss claim to an insurance company also removes the loss payee from the process of recovering from the loss in a substantive way. As such, the present processes do not provide the insurance consumer or loss payee certain choices that may otherwise be available to satisfy the requirement for being made whole with respect to a loss.
Although the current system of handling claims has been adjusted and fine tuned, it does not employ the powerful tools of Internet communications or network economics that the Internet makes possible. To reduce insurance claim's handling costs and to realize greater levels of efficiency and customer satisfaction, newer technologies must be employed. Tremendous opportunities for revenue are possible when Internet business methods are applied to the entire claim handling process, from the moment of first report, through the reinsurance indemnity process.
The use of the Internet opens up the possibility of centralizing claims processing for an entire industry. In this manner, the insurance industry can obtain the benefits that accrue from one resource rather than the multiple disparate discrete claims handling resources that currently exist.
Through centralizing the claim process and making it accessible to the insurance consumer, the traditional institutional approach to remediating a loss is placed into the hands of the person suffering the loss. This may create opportunities to aggregate the kinds of services and products that a loss payee requires to satisfy the loss. As such, the centralized system can consider volume purchasing of services and products to satisfy the loss payee requirements. Such volume purchasing would lower the cost of goods and services that collectively the insurance industry pays today.
A centralized claim processing center that is accessible by customers, insurance companies and other institutions dealing with the claim loss process, would be beneficial in terms of standardizing a claim's fulfillment, offering choices among competing options for recovering from losses, reducing the overhead costs associated with settling claims, and creating ancillary benefits that only can be achieved from the process of centralization.
Because a centralized conduit for claims processing does not exist in the United States, it is not possible to collect the types of information and data that would be helpful in analyzing how to bring additional efficiencies to the claim loss process. For example, the collection of data regarding the universe of claims may assist in a more equitable rate setting among carriers. Another example where the collection of claim data may be advantageous is in analyzing recovery costs from certain types of losses and determining whether such losses correlate to region or other identifiable statistic.
The existence of a centralized collection of claims would allow subrogation claims files to be created. Once the value of such files are established, there may be a market for their sale. Essentially an exchange of marketable subrogation claims could be created.
Accordingly, a system and method is needed that will enable all parties involved in a loss claim process including but not limited to customers, carriers, agents, brokers, claims service representatives (CSRs), suppliers, and attorneys to resolve needs stemming from loss claims at a central, branded, secure website serving claims for multiple participating insurers. Such a site would also permit the aggregation of products and services to fulfill the loss recovery activity. Additionally, such a site would permit the aggregation of subrogation claims that could thereafter be sold or auctioned in an exchange environment.